Welcome to Money Matters: GLAMOUR’s weekly dive into the world of finance – your finance. These uncertain times have reminded us just how much understanding our money matters and yet… how little we talk about it and how much it’s shrouded in secrecy.
This stops now.
Keen to break that money taboo, we’re chatting all things personal finance from money saving tips to ISAs and pensions. Each week, a woman in a unique situation will give us an honest breakdown of her finances, and our expert will tell her easy tips on exactly how to tackle it. So, grab a cuppa, take a seat, and let’s talk about money…
Don’t forget to join GLAMOUR’s new Facebook group, Money Matters, for more exclusive finance content, and get in touch with us at moneymatters@condenast.co.uk to submit your own anonymous money diary.
Caroline*, 31, works in ecomm in Manchester. She recently got a pay rise and wants to get smarter with her finances. Here’s her money diary…
I’ve been in my ecomm job for three years now. I’ve been working from home throughout the pandemic, and recently got a small pay rise so I’m feeling pretty good financially.
Growing up, money was always tight in my family and once I started earning myself I had a bit of a ‘spend it all’ mentality – I’d splurge a lot rather than saving, so I’d always be left going into overdraft by the end of the month. I feel like unless you’ve got parents who are super clued in, nobody is ever taught how to manage money when they’re younger, and my twenties were definitely spent being totally clueless about it.
I’m trying to teach myself some more now. I do manage to save a decent amount each month and I don’t live beyond my means any more, but it seems like now I’m doing the basics I need to move beyond that to be a bit smarter and make my money work harder.
Should I have a credit card to build my credit score and earn points? I have several pensions from previous jobs, should I put them all in one place or is it better to keep them spread out? What should I be doing with my savings rather than just having them in an ISA? I have no idea where to start!
MY ACCOUNTS
Current account: £650
Savings account: £12,600 in an ISA
MY INCOMINGS
Annual salary: £45,000 before tax; £34,264 after tax & pension
Monthly wage: £3,750 before tax; £2,855 after tax & pension
Any other incoming payments: £0
MY OUTGOINGS
Rent: £730 (my share)
Bills: Around £190 inc phone, Spotify, Netflix, charity donation and household bills.
Other: I try to save at least £400 a month, sometimes more.
Splurges: I love shopping, but recently I’ve been getting into buying second-hand and vintage, it’s so much cheaper and better for the environment but you still get the thrill of something ‘new’.
Weekly budget: roughly £150
MY DEBTS
None
MY MONEY THOUGHTS
My worst money habit: Putting things off or not facing up to things, like I’ve been meaning to sort my pensions out for ages and still haven’t got round to it.
My biggest money worry: That I’m just coasting and not properly saving for my future /retirement.
My financial hopes for the future: To be financially stable, one day buy a place of my own and eventually be able to retire comfortably!
Current money mood: 🔎 🤷🏼 🤓
1. The financial upskill
You’re right that most of us haven’t a clue about money as we enter adulthood. If anything, we’ve inherited our parents’ less than ideal financial habits. Leaving school, we might be able to calculate the hypotenuse of a triangle or tell you that mitochondria is the powerhouse of the cell, but set up a direct debit? Unlikely. While I’m an advocate for financial lessons in school, I also think that financial literacy is best learned ‘on the job’ as we go about our lives and make financial choices. Thankfully, there’s a raft of people making money stuff just a bit less snoozy these days. Follow the hashtag #personalfinance on Instagram or even better (I’m very biased) follow @gofundyourself. On Mondays we run a weekly financial news bulletin on IG Stories, which is a great way to stay conscious of how financial events impact you.
2. The great myth
Our society is quite literally built with credit as a cornerstone and without it things would fall apart very quickly. We can debate the morals of whether our obsession and reliance on it is a good thing, but whatever you feel, applying for a credit card has become somewhat of a rite of passage into adulthood. We’re told it’s an absolute must to getting a mortgage (I wonder who peddled that myth 🏦 👀). If you’re looking to boost your score, ignore the claims that you NEED a credit card. Food, water? Yes. Credit card? No. While they can be a useful financial tool they can also be the source of financial nightmares. If you’ve read this column, you’ll know that about half of contributors write in worried about credit card debt.
3. Proceed with caution
Used wisely, credit cards can be useful. However, as someone who has recognised that spending money isn’t something you find particularly difficult, it’s important to question whether there’s a risk you won’t use it so well. If that’s a hard no, there’s no shame in deciding that actually, a credit card is more worry that it’s worth. If it’s your credit score you’re worried about, take a look! There’s loads of other ways to improve how your viewed by lenders: rent reporting, paying bills on time, staying in the same job and at the same address for an extended period and being on the electoral roll can all help.
P.S. If you do decide to apply for a credit card, it’s always worth using an eligibility checker before you make the full application and be aware that applying does impact your credit score.
4. Consolidation station
Pensions are a faff, which is why there’s an estimated 1.6 million lost pension pots in the UK. As an aside, if you think there might be a lost pot with your name on it, you can use the government’s free Pension Tracing Service. As for combining previous pensions, consolidating can be a great option. It means you’ve got less to keep track of and you may pay fewer management fees. However, it’s also very important to check that combining doesn’t mean you’ll miss out on any perks such as guaranteed annuity rates. Your pension provider or a financial advisor can help you make the call. Here’s a handy pension masterclass for more on that.
5. Saving plans
As for your savings, this really depends on your goals. An ISA is a great way to keep your money away from the taxman, but keeping it in cash isn’t going to grow it. Beyond the cash ISAs you’ve got things like the Stocks and Shares ISA, and Stocks and Shares Lifetime ISA. If you’ve got an emergency fund in cash, investing additional savings into one of these can be a great way to potentially grow your money, but you need time: ideally five years, no touching. Learn more in this handy ISAs guide.
Alice Tapper is the author and founder of Go Fund Yourself. For more money guidance and tips, follow her @gofundyourself.
This column offers guidance, not financial advice. For personal investment advice, it’s always best to speak with a financial advisor.
*Name has been changed.